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Early Look: China’s Economy Likely Stabilized in October, But Growth Remained Subdued

A worker is silhouetted as he cleans a window at a shopping mall in Beijing, China, Wednesday, Nov. 4, 2015.

Associated Press

China’s economy may have stabilized in October after a slew of government stimulus measures, but growth momentum remained subdued amid sluggish demand both at home and abroad.

The world’s second-largest economy likely reaped a widening trade surplus in October, mainly boosted by a sharper decrease in imports, instead of robust export growth like it recorded in previous years. China’s exports likely fell 4.1% in October from a year earlier, following an on-year drop of 3.7% in September, according to a median forecast of 11 economists polled by The Wall Street Journal. The nation’s imports in October likely declined 15.0% from a year earlier, compared with a 20.4% fall in September. That will take the trade surplus last month to $62.2 billion, compared with $60.3 billion recorded in September. China’s customs bureau is set to release trade data Sunday.

China’s Ministry of Commerce said Thursday that the nation’s exports for the full year of 2015 are expected to be little increased from a year earlier, while imports will likely report a “relatively big” decline. China set a 6% trade growth target for 2015 that it looks very likely to miss. China’s foreign trade in the first nine months of the year fell 8.1% from a year earlier, as exports declined by 1.9% and imports plunged 15.3%.

Beijing sent a strong signal earlier this week that it could allow economic growth to slip to as low as 6.5% in the next five years, down from its current 7%. In the third quarter, China’s economy grew 6.9% from a year earlier, its slowest pace since the global financial crisis.

China’s industrial production likely edged up to 5.8% in October, compared with a 5.7% pace a month earlier, according to the poll.

“Traditional manufacturing sectors are struggling with overcapacity, while high-technology and consumer-related sectors are performing better,” Ding Shuang, an economist with Standard Charter, said in a research note.

China’s fixed asset investment likely came in lower at 10.1% growth in October, down from 10.3% in September, as slower industrial investment weighs on growth. Meanwhile, infrastructure and property investments are expected to have accelerated last month as the government sped up spending and investment approvals and relaxed curbs to encourage home purchase, economists say.

Growth of retail sales likely held up unchanged at 10.9% in October, as consumption continues to be one of few bright spots in an economy that Beijing is working to make less reliant on trade and investment.

Given lower food prices, China’s consumer price index likely eased to 1.4% last month, compared with a 1.6% rise in September, the poll showed. The producer price index may have fallen 5.8% on year in October, compared with a 5.7% decline a month earlier, as weakening demand saddled Chinese factories with overcapacity and forced them to cut prices. Factory prices have been lingering in deflation territory for more than 40 straight months.

Chinese banks may have extended 800 billion yuan ($125.9 billion) worth of loans in October, falling from 1.05 trillion yuan a month earlier. M2, the broader measurement of money supply in the economy, picked up to 13.2 in October as the central bank eased its monetary policy again in the month. In a move to encourage more lending, the People’s Bank of China last month cut its benchmark interest rates for the sixth time in less than a year and lowered the amount of money banks must hold in reserve.